Quarterly Financial Report for the quarter ended December 31, 2022

Statement outlining results, risks and significant changes in operations, personnel and programs

Table of contents

  1. Introduction
  2. Highlights of fiscal quarter and fiscal year-to-date results
  3. Risks and uncertainties
  4. Significant changes in relation to operations, personnel and programs
  5. Approval by senior officials
  6. Appendix A

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates for fiscal year 2022-23. It has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. For the purposes of both the Main and Supplementary Estimates, the Department is referred to as the Department of Indigenous Services Canada.

The Department of Indigenous Services Canada (DISC) was first established by Order–in-Council (P.C. 2017-79) on November 30, 2017. The Budget Implementation Act (BIA) of 2019 established Indigenous Services Canada (ISC) with the enactment of the Department of Indigenous Services Act (DISA).

The quarterly financial report has not been subject to an external audit or review.

1.1 Authority, Mandate and Departmental Results

Indigenous Services Canada (ISC) works collaboratively with partners to improve quality of life and access to high quality services for Indigenous Peoples. Its vision is to support First Nations, Inuit and Métis to design, manage and deliver services to their communities.

The Minister of Indigenous Services is responsible for this organization.

Further details on ISC's authority, mandate and department results can be found in Part II of the Main Estimates and the Departmental Plan.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Department's spending authorities granted by Parliament, and those used by the Department consistent with the Main Estimates for the 2022-23 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of the fiscal quarter and the fiscal year-to-date (YTD) results

This section:

As of the third quarter, the Department has total budgetary authorities of $44 billion for 2022-23. Indigenous Services Canada (ISC) is composed of the following sectors: Regional Operations (RO), the Education and Social Development Program and Partnerships (ESDPP), Lands and Economic Development (LED), Child and Family Services (CFS), First Nations and Inuit Health Branch (FNIHB) and Internal Services.

Highlights of the fiscal quarter and the year-to-date results (Unaudited)
(In thousands of dollars)
Budgetary authority Authorities available for the year ending Expenditures as at Q3 Year-to-date expenditures
March 31, 2023 March 31, 2022 Variance 2022-23 (December 31, 2022) 2021-22 (December 31, 2021) Variance Q3 2022-23 (October 1 to December 31, 2022) Q3 2021-22 (October 1 to December 31, 2021) Variance
Vote 1: Operating Expenditures 25,913,370 3,842,954 22,070,416 600,816 606,178 (5,362) 3,784,729 1,639,253 2,145,476
Vote 5: Capital Expenditures 8,817 38,734 (29,917) 194 871 (677) 1,009 2,471 (1,462)
Vote 10: Grants and Contributions 18,000,603 17,010,736 989,867 3,708,321 3,533,393 174,928 11,599,290 9,998,625 1,600,665
Statutory Authorities 149,774 166,755 (16,981) 34,005 37,649 (3,644) 92,416 90,384 2,032
Total 44,072,564 21,059,179 23,013,384 4,343,336 4,178,091 165,245 15,477,444 11,730,733 3,746,711

2.1 Statement of voted and statutory authorities

As per the highlights of the fiscal quarter and the year-to-date results table, total budgetary authorities available for use increased by $23 billion from the previous year:

  • Vote 1 authorities increased by $22 billion
  • Vote 5 authorities decreased by $30 million
  • Vote 10 authorities increased by $990 million
  • Statutory authorities decreased by $17 million

Vote 1 Operating expenditures

Operating authority has increased by $22 billion in the third quarter of 2022-23 compared to the same period of the previous year, mainly due to the following:

  • $22 billion for Out-of-court settlements related to compensation for Child and Family Services and Jordan's Principle;
  • $134 million for Non-Insured Health Benefits;
  • $63 million for Health Outcomes;
  • $60 million to Settle Litigation for the Ermineskin First Nation;
  • $53 million for Jordan's Principle & Inuit Child First Initiative;
  • $41 million for the COVID-19 Public Health Response and the Indigenous Community Support Funds;
  • $21 million for Mental Health and Wellness.

Offset by a funding decrease for the following programs:

  • $265 million for Child and Family Services;
  • $36 million for Communicable Disease Control and Management;
  • $15 million for Indian Residential Schools Resolution Health Support Program;
  • $14 million for Clinical and Client Care.

Vote 5 Capital expenditures

Capital authority has decreased by $30 million in the third quarter of 2022-23 compared to the same period of the previous year, mainly due to the continuation of public health responses in Indigenous communities.

Vote 10 Grants and Contributions

Grants and Contributions authority has increased by $990 million in the third quarter of 2022-23 compared to the same period of the previous year, mainly due to the following:

  • $1 billion for Indigenous Infrastructure and Safe, clean drinking water;
  • $714 million for Child and Family Services, including annual growth;
  • $407 million for the COVID-19 Public Health response and the Indigenous Community Support Fund;
  • $259 million for Jordan's Principle & Inuit Child First Initiative;
  • $162 million for Mental Health and Wellness;
  • $150 million for Frist Nations Elementary and Secondary Education on Reserve initiatives;
  • $107 million for the legacy of Residential Schools;
  • $66 million for Medical Air Travel in Nunavut;
  • $61 million to support community development initiatives for First Nations, Metis and Inuits;
  • $56 million for Indigenous Governance and Capacity, including annual growth;
  • $55 million for the Assistance Living Program Integrity;
  • $46 million for Anti-Indigenous Racism;
  • $45 million for the new fiscal relationship with First Nations;
  • $40 million to support Indigenous participation during the papal visit to Canada;
  • $40 million to mitigate and measure the impact of COVID-19 on small businesses and help Indigenous communities to face inflation and population growth;
  • $38 million for the Indigenous Tourism Association of Canada;
  • $37 million for Non-Insured Health Benefits;
  • $37 million for Income Assistance, including annual growth;
  • $28 million for the Violence Prevention program.

Offset by a funding decrease for the following programs:

  • $692 million for Urban programming and emergency management assistance for activities on reserves;
  • $673 million for First Nations and Inuit Primary Health Care;
  • $443 million for First Nations and Inuit Health Infrastructure Support;
  • $341 million for the Aboriginal Economic Development Strategic Partnerships Initiative;
  • $172 million for management of contaminated sites of First Nation;
  • $49 million for supportive care in Indigenous communities;
  • $47 million for supply to public services in Indian Government Support.

Statutory Authorities

Statutory Authority (Operating and Grants & Contributions) has decreased by $17 million in the third quarter of 2022-23 compared to the same period of the previous year, mainly due to the following:

  • Increase of $15 million for Employee Benefits Plan from most above listed items in Vote 1 Operating;

Offset by a decrease for:

  • $30 million for Contributions related to the Canada Community-Building Fund.

2.2 Expenditures analysis by standard object

Departmental Budgetary Expenditures were $4.3 billion for the quarter ended December 31, 2022.

Departmental Budgetary Expenditures were $165 million higher than the same quarter in 2021-22. As per the Departmental Budgetary Expenditures by Standard Object tables, the increase for the quarter is mainly due to the changes listed below

The following table provides a detailed explanation of these changes by standard object (Unaudited)
(In thousands of dollars)
Standard Object Changes to Standard Object expenditures Variance between 2022-23 Q3 and 2021-22 Q3 expenditures Variance between 2022-23 year-to-date and 2021-22 year-to-date expenditures
Expenditures:
1-Personnel There are increases in Jordan's Principle, Indigenous Governance and Capacity and Child and Family Services expenditures due to increase in personnel in order to deliver department programs. 18,289 25,064
2-Transportation and communications There is an increase in Supplementary Health Benefits due to 2021-22 expenditures for medical travel that were suppressed because of the COVID-19 pandemic. 8,220 44,805
3-Information 1,610 4,103
4-Professional and special services Jordan's Principle is a demand-driven legal obligation, and expenditures have been steadily increasing year over year. The first three quarters of 2022-23 have seen large volume increases in the number of contribution agreements requests. 6,294 73,821
5-Rentals 71 (12)
6-Purchased repair and maintenance 928 1,404
7-Utilities, materials and supplies 2,648 31,246
8-Acquisition of land, buildings and works (167) (245)
9-Acquisition of machinery and equipment (694) 2,377
10-Transfer payments Transfer payment expenditures* 167,036 1,591,233
11-Public debt charges
12-Other subsidies and payments (37,572) 1,975,118
Total gross budgetary expenditures 166,663 3,748,914
Less Revenues netted against expenditures
Services and Benefits to Individuals (1,418) (2,203)
Total Revenues netted against expenditures (1,418) (2,203)
Total net budgetary expenditures 165,245 3,746,711

*The net increase of $167 million in transfer payment expenditures is mainly due to the following:

  • $187 million for Child and Family Services (CFS) due to the implementation of the Agreement in Principle (AIP) Immediate Measures on April 1, 2022 for reforming the CFS Program including Prevention as well as First Nations Representative Services;
  • $89 million for Income Assistance due to the rise of inflation which has resulted in the program providing additional allocations to recipients to assist with the increase in the cost of living;
  • $73 million for Housing due to significant investment in infrastructure to support the ongoing work to close the infrastructure gap on reserve. This results in an increase in Grants and Contributions compared to the previous fiscal year;
  • $67 million for Jordan's Principle due to the pandemic related restriction being lifted, especially for in-person and medical travel related costs. Jordan's Principle is a demand-driven legal obligation, and expenditures have steadily increased year over year;
  • $65 million for Education due to additional funding received to refine the elementary and secondary education interim regional funding formulas in critical areas and to provide stable funding for First Nations operated education programs year to year;
  • $52 million for New Fiscal Relationship due to the new recipients First Nations that qualified to receive the 10-Year Grant;
  • $48 million for Water & Wastewater due to the mandate of closing gap for on reserve infrastructure. ISC has significantly increased investment in Water & Wastewater, resulting in an increase in Grants and Contributions compared to the previous fiscal year.

Offset by decreases for:

  • $135 million for Executive Development Capacity & Readiness due to the winding down of funding to support First Nations, Inuit and Métis community-or collectively owned businesses and microbusinesses whose revenues have been affected by the COVID-19 pandemic and to support community owned businesses who had a significant decline in own-source revenues due to the COVID-19 pandemic;
  • $94 million for Urban Program for Indigenous Peoples due to the gradual scaling down of the COVID-19 Indigenous Community Support Funding;
  • $88 million for Emergency Management Assistance due to a net decrease related to the COVID-19 pandemic and the response and recovery expenditures;
  • $52 million for Communicable Disease Control & Management due to the wind down of funding related to the pandemic;
  • $41 million for Self-Determined Services due to a change in funding and moved under Education programs;
  • $37 million for Home and Community Care due to diminished impact of COVID-19 pandemic;

3. Risks and uncertainties

As the Department works with partners to improve access to high-quality services for First Nations, Inuit and Métis, support self-determination and Indigenous-led service delivery, and address the fundamental issue of closing socio-economic gaps, it must remain mindful of the changing environment in which it operates as well as the risks that may delay or prevent it from achieving its objectives.

Risk-awareness empowers the Department to improve planning, resource allocation, and investment decisions, while allowing ISC to achieve objectives with more efficiency and resilience. The Department strives to take an enterprise approach to identify risks across programs, sectors and regions which may impede the achievement of objectives and to develop coordinated response measures. Information concerning risk is continuously collected and shared widely to gain a holistic picture of challenges and opportunities and to facilitate the development of the best treatment of risk at the lowest cost.

In 2022-23, ISC is addressing key priorities in core services linked to advancing health, supporting families, helping build sustainable communities, and supporting Indigenous communities in self-determination. The Department's key risks and the efforts being taken to mitigate them are described in the 2022-23 Departmental Plan.

The pandemic has highlighted the importance of managing risks while delivering on our Department's core mandate. The internal and external risk environment has significantly changed and created the need for additional financial flexibility to allocate funds to the most pressing issues, while continuing to deliver essential services and programs to address underlying social, economic and health issues in communities.

With respect to Grants and Contributions, the Department continues to undertake risk assessments of new, existing, and reformed programs and general assessments of each recipient to identify areas of risk. Conducting recipient and project audits ensures that recipients have appropriate management, financial and administrative controls in place.

The Department's program spending is mainly comprised of contribution agreements allocated to third party recipients. There are several financial uncertainties associated with ISC's diverse contribution programs which influence spending patterns. Recipients face a range of challenges including unexpected cost increases, increased demand for health and social services, labour shortages, construction and supply delays and other external factors. These uncertainties have a direct impact on recipients' ability to deliver projects or spend as planned, resulting in risks to the Department's ability to meet objectives including closing socio-economic gaps. On ISC's sound stewardship of public funds, examples of actions and focus include increased risk analysis and monitoring, more frequent risk discussions at governance committees, the development of ISC's Integrated Risk Management Framework, the review of ISC's Budget Management Framework, strengthened planning and cash management activities, and increased fraud prevention and detection activities.

The Department will continue to monitor its risk exposure and take action as needed to mitigate the risk of not achieving objectives and to responsibly manage public resources. Achievement of ISC's mandate and delivery of programs remains reliant on timely access to required authorities and appropriate levels of funding.

4. Significant changes in relation to Operations, Personnel and Programs

There have been no significant changes in relation to Operations, Personnel and Programs during the third quarter of fiscal year 2022-23.

5. Approval by senior officials

Approved, as required by the Treasury Board Policy on Financial Management:

Original signed by

__________________________
Gina Wilson
Deputy Minister, ISC
City: Gatineau (Canada)

Original signed by

__________________________
Philippe Thompson
Chief Finances, Results and Delivery Officer
City: Gatineau (Canada)

6. Appendix A

Statement of Authorities (Unaudited)
(In thousands of dollars)
Statement of Authorities (Unaudited) Fiscal Year 2022-23 Fiscal Year 2021-22
Total available for use for the year ending March 31, 2023 Used during the quarter ended December 31, 2022 Year to date used at quarter ended December 31, 2022 Total available for use for the year ending March 31, 2022 Used during the quarter ended December 31, 2021 Year to date used at quarter ended December 31, 2021
Vote 1: Operating expenditures 25,913,370 600,816 3,784 729 3,842 954 606,178 1,639,253
Vote 5: Capital expenditures 8,817 194 1,009 38,734 871 2,471
Vote 10: Grants and Contributions 18,000,603 3,708,321 11,599,290 17,010,736 3,533,393 9,998,625
S- Statutory Authorities: Operating expenditures
Contributions to employee benefit plan 114,548 25,144 75,433 101,847 21,369 64,106
Court awards–Crown Liability and Proceedings Act 0 774 824 0 244 585
Minister of Indigenous Services Canada – Salary and motor car allowance 93 23 69 91 23 68
Liabilities in respect of loan guarantees made of Indian for Housing and Economic Development 2,000 0 0 2,000 0 0
Payments related to Public Health Events of National Concern and income support 0 0 0 0 0 0
Other 0 114 698 0 170 801
S- Statutory Authorities: Transfer Payments
Canada Community – Building Fund – Financial municipal infrastructure 31,033 8,392 11,733 60,718 15,770 24,393
Contributions in connection with First Nations Infrastructure 0 0 0 0 0 0
Indian Annuities Treaty payments 2,100 (442) 3,659 2,100 73 431
Payments related to Public Health Events of National Concern and income support 0 0 0 0 0 0
Subtotal Statutory Authorities 149,774 34,005 92,416 166,755 37,649 90,384
Total Authorities 44,072,563 4,343,336 15,477,444 21,059,179 4,178,091 11,730,733
Departmental budgetary expenditures by standard object (Unaudited)
(In thousands of dollars)
Expenditures Fiscal Year 2022-23 Fiscal Year 2021-22
Planned expenditures for the year ending March 31, 2023 Expended during the quarter ending December 31, 2022 Year to date used at quarter ended December 31, 2022 Planned expenditures for the year ending March 31, 2022 Expended during the quarter ending December 31, 2021 Year to date used at quarter ended December 31, 2021
1-Personnel 863,375 187,594 532,451 760,900 169,305 507,387
2-Transportation and communications 423,230 109,357 282,921 485,479 101,137 238,116
3-Information 7,392 2,318 5,642 4,149 708 1,539
4-Professional and special services 1,921,263 173,316 499,401 849,506 167,022 425,580
5-Rentals 24,230 4,370 12,440 22,380 4,299 12,452
6-Purchased repair and maintenance 7,420 1,557 2,879 7,441 629 1,475
7-Utilities, materials and supplies 833,654 141,708 474,333 709,353 139,060 443,087
8-Acquisition of land, buildings and works 0 8 8 0 175 253
9-Acquisition of machinery and equipment 8,817 11,041 33,314 38,734 11,735 30,937
10-Transfer payments 18,033,736 3,716,272 11,614,682 17,073,553 3,549,236 10,023,449
11-Public debt charges 0 0 0 0 0 0
12-Other subsidies and payments 22,005,540 (1,629) 2,025,217 1,202,000 35,943 50,099
Total gross budgetary expenditures 44,128,655 4,345,912 15,483,288 21,153,495 4,179,249 11,734,374
Less Revenues netted against expenditures
Services and Benefits to Individuals (56,092) (2,576) (5,844) (94,316) (1,158) (3,641)
Total Revenues netted against expenditures (56,092) (2,576) (5,844) (94,316) (1,158) (3,641)
Total net budgetary Expenditures 44,072,564 4,343,336 15,477,444 21,059,179 4 178,091 11,730,733

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